China and Europe must cooperate in data analysis

By Frank-Jürgen Richter

Global Times, August 7, 2018

China, Europe and the US are participants in a three-legged race. However one assesses them, these regions are the three wealthiest in the world. Given their strong positions, it makes little sense for them to compete in a cut-throat manner in what should be a good-natured game, one featuring a cooperative flux of trade in goods and services. But at the present time it seems as though the US administration intends to follow through on the commitments made by US President Donald Trump while campaigning.

If that is to be so, it would be useful to review the ties between China and Europe, looking first to the flows of goods. In our globalized world, adherence to supply chain contracts is vital when a ship carrying 20,000 containers is on a tight delivery schedule. Shipping lines have developed their trade between China and Europe, aided to some extent by the enlarged Suez Canal.

Commodity movements do not arise by chance. A manufacturer will sell to a client, and then hard work follows to assure timely delivery of goods, which may cross national borders using multiple currencies and several modes of transportation. All must have contracts, and it is implied that raw materials are mined, refined and manufactured as inputs for sub-components, leading to the assembly of the finished object. Eventually, the customer has to dispose of the object ecologically into a recycling chain.

I suggest the best way forward for China and Europe is to build on each other’s strengths. It is relatively easy to undertake clever forecasting based on current knowledge – but very difficult to predict the next popular trend.

Data collection is a necessity for every nation and it is a strength of both China and Europe. Each nation collects data – at a minimum, its birth and death rates. In more advanced nations, they collect much more data on household activity. Global institutions, such as the World Bank and IMF, also collect data. Asian countries in recent years have emphasized the quality of data as well. Recently, “factor analysis” has surfaced again among statisticians to explain how many aspects of an economy move together or against each other, and whether these factors change significantly.

I suggest China and Europe ought to compare complex data-driven strategies further into the future than they did back at the turn of the millennium. Presently we have better data, stored in the Cloud, and we are more inclined toward big data driven by heavy statistical computations.

Big data can help achieve ecological and sustainable growth as well. Global resources are becoming more difficult to mine and refine. For instance, gold and many “rare earth” elements used in smartphones appear as blocks during manufacturing, but at the end of their lives, millions of phones are too small to attempt metal recovery and are dumped in landfills. This is wasteful and potentially hazardous due to the leaching of heavy metals into aquifers. Could China and Europe jointly research a better phone aimed at ecological and sustainable outcomes?

Young people in London, Paris, Frankfurt as well as Hong Kong, Shanghai, and Beijing are developing innovations and driving entrepreneurship that could lead us to improvement. It is vital, however, to re-educate senior managers, who make the decisions, to understand the nuances of emergent big data analyses, especially those like factor analysis, which analyze several variables at the same time. Gone are the simple days of “if this, then that.”

We accept our world is uncertain and can quantify the probabilities to reduce our worries about the future. If we can do that about our inter-firm operations, then governments can also do the same, with China and Europe cooperating. Developing better certainties in an uncertain world is vital and this may be achieved through stronger transparency, governance and ecological research.

The author is the founder and chairman of Horasis, a global visions community. Horasis hosts its Horasis China Meeting in Kiev, Ukraine, on October 14-15.